EU lawmakers voted 334 to 315 on Tuesday against a measure known as "backloading", which would have cut the current surplus of allowances. These so-called allowances give holders the right to emit one ton of carbon dioxide (CO2), or the equivalent amount of two more greenhouse gases, nitrous oxide (N2O) and perfluorcarbons (PFCs).
However, the vote against "backloading" is not final. It will now go back to the EU Parliaments Environment Committee for further consideration.
The rejected EU Commissions carbon fix plan involved delaying the sale of permits covering 900 million tons of emissions for three years, and reintroducing, or "backloading" them to the market in 2019 and 2020 from the over-supplied European emissions trading scheme (ETS), reports Bloomberg.
Emitters in the ETS must hand in allowances to match the previous years emissions by April 30 every year and may buy them for compliance leading up to that date, according to the news agency. On the same day the plan was rejected, the price of carbon went down 40% to 2.63 a ton, added Reuters.
The emissions trading scheme (ETS) was created in 2005 to reduce greenhouse gas emissions by making companies pay for their annual pollution.
Yesterday Germanys Federal Environment Minister, Peter Altmaier told public radio broadcaster German radio Deutschlandfunk that this decision was a "setback for climate protection in Europe."
He added that the proposed route was not effective. "I personally believe that we can effectively combat climate change with emissions trading. I also believe that it is a market-based instrument, because you have to pay a price for CO2. This, in my view, is better than government regulation and limits," stated Altmaier.
The Environment Minister did admit, however, that in the past, too many certificates were distributed for free to businesses. This led to prices dropping, which in turn meant there was no incentive to reduce CO2 emissions. The aim was for companies, particularly those in the power sector, to produce less CO2. This was clearly not reached with the current system, he said.
He further expressed the hope that, given the narrow majority against the proposal, "yet another decision" could be brought to the table in the coming months.
Meanwhile, Climate Commissioner Connie Hedegaard told Reuters yesterday, "Forging agreement on climate policy has become a lot harder following economic crisis." She continued, "I hope that in Europe, we would not have become so poor that we think it should cost nothing to pollute."
The EU spokesperson for Climate Action could not be reached for comment.
Edited by Becky Beetz.